Thursday, July 2, 2015

Why All Leaders Need to Understand Big Data

Do you only care about statistics when discussing fantasy football? Is the only knowledge you have of data is how to spell it? If so, you better wise up – fast.

While data and statistics are changing the way companies like Google and Amazon do business, they also are impacting industries from manufacturing to health care. Managers and employees who are clueless about the subjects may find themselves standing on the sidelines as key projects continue without them or senior leaders pass them over for promotions.

Susan Athey, a Stanford Graduate School of Business economics professor, has consulted for companies like Microsoft and other technology firms. She says that while these companies require their managers to be knowledgeable about data collection and statistics, it’s a trend that’s starting to seep into other industries.

She explains that more companies are collecting and analyzing data as a way to stay competitive and innovative. It’s been shown that when companies inject data and analytics deep into their operations, they can boost productivity and profit that is 5% to 6% higher than the competition.

In other words, managers can no longer just ignore Big Data or trust the IT department or an outside firm to deal with it. If they value their jobs, they need to become more informed.

For example, data can show whether the price point on a product needs to be altered, whether to open a new store in another city or if television marketing efforts are failing. But if you’re a manager in marketing or sales, then being clueless about that data means you can’t ask smart questions – or know when there’s a problem, Athey says.

In addition, while your company may not be collecting a lot of data right now, what about your competitors? Your suppliers? Are others collecting data and making decisions based on data analysis that will eventually impact your product or business?

“I think it’s a smart idea to become more familiar with data and statistics,” Athey says. “There are free online courses, or you can go to executive training sessions. If you’re getting your MBA, go take a programming or statistics course.”

Athey says she isn’t suggesting that all managers become fluent in statistics or data analysis, but she says “you want to be able to look at data instead of waiting for someone else to interpret it for you.”

Keep in mind, she says, that while someone in IT may understand the more technical aspects, they may not have your knowledge of a business’s strategy or grasp the importance of certain information to a key project. So, it’s important that leaders at any level “have an understanding of what kinds of questions they should be asking” when they’re (read more here)